Reports filing of Restated Q3 2023 Financial Statements and Restated 2022 Audited Consolidated Financial Statements
Third Quarter Highlights
- Net Loss of $5.4 million, compared to previously reported net loss of $5.8 million
- Adjusted EBITDA1 of $0.6 million, compared to previously reported Adjusted EBITDA of $0.05 million
- Revenue of $22.9 million, compared to previously reported revenue of $23.6 million
- Gross margin of 39.8%, compared to previously reported gross margin of 35.9%
- No change to previously reported cash position or cash usage in the quarter
Vancouver, British Columbia--(Newsfile Corp. - December 13, 2023) - CloudMD Software & Services Inc. (TSXV: DOC) (OTCQX: DOCRF) (FSE: 6PH) (the "Company" or "CloudMD"), an innovative health services company transforming the delivery of care, announces updated financial results for the third quarter ended September 30, 2023 in connection with filing restated reviewed interim financial statements for the third quarter of 2023 ("Q3 2023") and restated annual financial statements for 2022. All financial information is presented in Canadian dollars unless otherwise indicated.
Karen Adams, Chief Executive Officer, stated, "We're pleased to have the restatements behind us with no material changes to 2022 revenue, Adjusted EBITDA or cash position and a positive impact on 2023 profitability. We've made a commitment to our investors to put this Company on a path to profitability, and the restated Q3 2023 financial results reinforce the success we are seeing."
Prakash Patel, Chief Financial Officer, added, "The update to our previously reported Q3 2023 financial results led to an improvement in both gross margin and adjusted EBITDA, reaching a record 39.8% and $0.6 million, respectively."
Updated Third Quarter 2023 Financial Highlights
- Q3 2023 revenue of $22.9 million, compared to $23.2 million in the prior quarter and $23.5 million in Q3 2022. Adjusting for one-time Covid-19 mandates, the Company generated 6.5% organic revenue growth year to date compared to the prior period and 4.5% in Q3 compared to the prior year period.
- Q3 2023 gross profit margin1 was 39.8% compared to 38.2% in the prior quarter and 34.0% in Q3 2022. Gross margin improved by 160 bps from the prior quarter and 580 bps compared to the same period in 2023 due to realized efficiency gains in the cost of delivery and improved margins in the Company's Assessments business.
- Q3 2023 Adjusted EBITDA1 of $0.6 million, compared to Adjusted EBITDA1 of ($0.7) million in the prior quarter and ($3.2) million in Q3 2022. The improvement in Adjusted EBITDA1 from Q2 2023 and the prior year was driven by continued improvements of margins across the business and continued cost control.
- Net loss from continuing operations in Q3 2023 was $4.5 million compared to a loss from continuing operations of $88.6 million in the prior year, which included an impairment charge of $80.8 million.
- Total cash used Q3 2023 was $5.7 million. Normalized cash outflow1 in Q3 2023 was $2.3 million, and Adjusted net cash used in operating activities was $0.4 million. As of September 30, 2023, the Company had $13.1 million of cash and cash equivalents.
Select Financial Information
All results were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.
| Selected Financial Information (unaudited) | Three months ended | Nine months ended | ||||||||||
| September 30 | September 30 | |||||||||||
| 2023 | 2022(2) | 2023 | 2022(2) | |||||||||
| Revenue | $ | 22,932 | $ | 23,545 | $ | 69,018 | $ | 77,136 | ||||
| Cost of sales | 13,797 | 15,548 | 42,579 | 50,374 | ||||||||
| Gross profit (1) | $ | 9,135 | $ | 7,997 | $ | 26,439 | $ | 26,762 | ||||
| Gross profit % | 39.8% | 34.0% | 38.3% | 34.7% | ||||||||
| Indirect Expenses | ||||||||||||
| Sales and marketing | 774 | 1,543 | 2,759 | 5,154 | ||||||||
| Research and development | 397 | 968 | 1,300 | 3,354 | ||||||||
| General and administrative | 7,772 | 8,790 | 24,537 | 27,199 | ||||||||
| Share-based compensation | 100 | 273 | 500 | 1,295 | ||||||||
| Depreciation and amortization | 3,683 | 3,561 | 10,568 | 10,177 | ||||||||
| Acquisition and divestiture-related, integration and restructuring costs | 1,071 | 1,659 | 2,813 | 9,183 | ||||||||
| Operating loss | $ | (4,662 | ) | $ | (8,797 | ) | $ | (16,038 | ) | $ | (29,600 | ) |
| Other income | 375 | 33 | 606 | 304 | ||||||||
| Change in fair value of contingent consideration | 142 | 996 | 142 | 7,046 | ||||||||
| Change in fair value of liability to non-controlling interest | - | (64 | ) | (549 | ) | (232 | ) | |||||
| Change in contingent liability | - | - | 760 | - | ||||||||
| Finance costs | (596 | ) | (515 | ) | (1,653 | ) | (1,541 | ) | ||||
| Impairment | - | (80,867 | ) | - | (80,867 | ) | ||||||
| Share in profit of joint venture | - | (221 | ) | - | (221 | ) | ||||||
| Income tax recovery | 213 | 795 | 526 | 742 | ||||||||
| Net loss for the period from continuing operations | (4,528 | ) | (88,640 | ) | (16,205 | ) | (104,369 | ) | ||||
| Net loss after tax from discontinuing operations | (850 | ) | (7,213 | ) | (3,192 | ) | (41,346 | ) | ||||
| Net loss for the period | $ | (5,378 | ) | $ | (95,853 | ) | $ | (19,397 | ) | $ | (145,715 | ) |
| Add: | ||||||||||||
| Depreciation and amortization | 3,683 | 3,561 | 10,568 | 10,177 | ||||||||
| Finance costs | 596 | 515 | 1,653 | 1,541 | ||||||||
| Impairment | - | 80,867 | - | 80,867 | ||||||||
| Income tax (recovery) | (213 | ) | (795 | ) | (526 | ) | (742 | ) | ||||
| EBITDA (1) | $ | (1,312 | ) | $ | (11,705 | ) | $ | (7,702 | ) | $ | (53,872 | ) |
| Share-based compensation | 100 | 273 | 500 | 1,295 | ||||||||
| Acquisition and divestiture-related, integration and restructuring costs | 1,071 | 1,659 | 2,813 | 9,183 | ||||||||
| Litigation costs | - | 101 | - | 555 | ||||||||
| Change in fair value of contingent consideration | (142 | ) | (996 | ) | (142 | ) | (7,046 | ) | ||||
| Change in fair value of liability to non-controlling interest | - | 64 | 549 | 232 | ||||||||
| Change in contingent liability | - | - | (760 | ) | - | |||||||
| Share in profit of joint venture | - | 221 | - | 221 | ||||||||
| Net loss after tax from discontinuing operations | 849 | 7,213 | 3,190 | 41,346 | ||||||||
| Adjusted EBITDA (1) | $ | 566 | $ | (3,170 | ) | $ | (1,552 | ) | $ | (8,086 | ) | |
| Loss per share, basic and diluted | (0.02 | ) | (0.32 | ) | (0.06 | ) | (0.50 | ) | ||||
| Loss per share from continuing operations, basic and diluted | (0.01 | ) | (0.29 | ) | (0.05 | ) | (0.35 | ) | ||||
Summary of Results from Last Four Quarters
The following tables provide a summary of the Company's financial results for the four most recently completed quarters. Financial results exclude all divested or held for sale assets.
| Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | |||||||||
| (unaudited) | (unaudited) | (unaudited) | (Restated unaudited) | |||||||||
| Revenue (1) | $ | 22,932 | $ | 23,191 | $ | 22,895 | $ | 22,318 | ||||
| Gross profit(1) | $ | 9,135 | $ | 8,850 | $ | 8,454 | $ | 8,009 | ||||
| Gross profit % (1) | 39.8% | 38.2% | 36.9% | 35.9% | ||||||||
| Net loss | $ | (5,378 | ) | $ | (6,877 | ) | $ | (7,146 | ) | $ | (8,602 | ) |
| Adjusted EBITDA (1) | $ | 566 | $ | (705 | ) | $ | (1,413 | ) | $ | (1,743 | ) | |
| EPS, basic and diluted | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.03 | ) |
| Cash and cash equivalents | $ | 13,097 | $ | 18,779 | $ | 18,752 | $ | 24,058 |
Restated Financial Statements and MD&A for Q3 2023 and 2022
As noted above, the Company filed restated audited consolidated financial statements and MD&A (as defined below) for the years ended December 31, 2022 and 2021 (the "2022 Filings"), as well as restated reviewed interim consolidated financial statements and MD&A for the three and nine months ended September 30, 2023 (the "Q3 2023 Filings"). Both the 2022 Filings and the Q3 2023 Filings are available on the Company's profile on SEDAR+ at www.sedarplus.ca.
As previously disclosed (see press release dated November 29, 2023), after the issuance of the audited consolidated financial statements for the years ended December 31, 2022, and 2021, additional procedures were performed by the Company's auditors and management and a number of adjustments were identified that required a restatement of such financial statements. Additional procedures were also performed over the interim financial statements in connection with the completion by the Company's external auditor of its interim review. Such procedures resulted in a number of adjustments that required a restatement of the interim financial statements. Details of the adjustments are fully described in Note 2 of the restated financial statements. However, it is noted that the adjustments reflected in the 2022 Filings and Q3 2023 Filings had: no material impact on 2022 revenue or adjusted EBITDA; and no impact on the Company's cash position.
The 2022 Filings replace and supersede the previously filed audited consolidated annual financial statements and MD&A filed on April 25, 2023 and the Q3 2023 Filings replace and supersede the previously filed unaudited consolidated interim financial statements and MD&A filed on November 29, 2023.
Financial Statements and Management's Discussion and Analysis
This news release should be read in conjunction with the Company's restated unaudited condensed interim consolidated financial statements and accompanying notes, and restated management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2023, and 2022, which can be found under the Company's profile on SEDAR+ at www.sedarplus.ca.
Non-GAAP Financial Measures
In addition to the results reported in accordance with IFRS, the Company uses various non-GAAP financial measures, which are not recognized under IFRS, as supplemental indicators of the Company's operating performance and financial position. These non-GAAP financial measures are provided to enhance the reader's understanding of the Company's historical and current financial performance and its prospects for the future. Management believes that these measures provide useful information in that they exclude amounts that are not indicative of the Company's core operating results and ongoing operations and provide a more consistent basis for comparison between quarters and years. Details of such non-GAAP financial measures and ratios and how they are derived are provided below, as well as in the MD&A in conjunction with the discussion of the financial information reported.
Since non-GAAP financial measures do not have any standardized meanings prescribed by IFRS, other companies may calculate these non-IFRS measures differently, and our non-GAAP financial measures may not be comparable to similar titled measures of other companies. Accordingly, investors are cautioned not to place undue reliance on them and are also urged to read all IFRS accounting disclosures presented in the restated audited consolidated financial statements and the related notes for the year ended December 31, 2022, and 2021.
EBITDA
EBITDA is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. EBITDA referenced herein relates to earnings before interest, taxes, depreciation, and amortization. This measure does not have a comparable IFRS measure and is used by the Company to assess its capacity to generate profit from operations before taking into account management's financing decisions and costs of consuming intangible and tangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Adjusted EBITDA referenced herein relates to earnings before interest, taxes, depreciation, amortization, share-based compensation, financing-related costs, acquisition, and divestiture-related, integration and restructuring costs, change in fair value of contingent consideration, change in fair value of liability to non-controlling interest, and net loss after tax from discontinuing operations. This measure does not have a comparable IFRS measure and is used by the Company to assess its capacity to generate profit from operations before taking into account management's financing decisions and costs of consuming intangible and tangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life, adjusted for factors that are unusual in nature or factors that are not indicative of the operating performance of the Company.
The following table provides a reconciliation of net loss for the periods to EBITDA and Adjusted EBITDA for the three months ended September 30, 2023, and 2022.
| | Three months ended September 30, | Variance | Nine months ended September 30, | Variance | ||||||||||||||||||||
| (Unaudited) | 2023 | 2022 | $ | % | 2023 | 2022 | $ | % | ||||||||||||||||
| Net loss | $ | (5,378 | ) | $ | (95,853 | ) | $ | 90,475 | (93%) | $ | (19,397 | ) | $ | (145,715 | ) | $ | 125,318 | (86%) | ||||||
| Add: | ||||||||||||||||||||||||
| Finance costs | 596 | 515 | (82 | ) | (16%) | 1,653 | 1,541 | (112 | ) | (7%) | ||||||||||||||
| Income tax (recovery) | (213 | ) | (795 | ) | 582 | (73%) | (526 | ) | (742 | ) | 216 | (29%) | ||||||||||||
| Impairment | - | 80,867 | (80,867 | ) | (100%) | - | 80,867 | (80,867 | ) | (100%) | ||||||||||||||
| Depreciation and amortization | 3,683 | 3,561 | 122 | 3% | 10,568 | 10,177 | 391 | 4% | ||||||||||||||||
| EBITDA(1) for the period | $ | (1,312 | ) | $ | (11,705 | ) | $ | 10,393 | (89%) | $ | (7,702 | ) | $ | (53,872 | ) | $ | 46,170 | (86%) | ||||||
| Share-based compensation | 100 | 273 | (173 | ) | (63%) | 500 | 1,295 | (795 | ) | (61%) | ||||||||||||||
| Acquisition and divestiture-related, integration and restructuring costs | 1,071 | 1,659 | (588 | ) | (35%) | 2,813 | 9,183 | (6,370 | ) | (69%) | ||||||||||||||
| Litigation costs | - | 101 | (101 | ) | (100%) | - | 555 | (555 | ) | (100%) | ||||||||||||||
| Change in fair value of contingent consideration | (142 | ) | (996 | ) | 854 | (86%) | (142 | ) | (7,046 | ) | 6,904 | (98%) | ||||||||||||
| Change in fair value of liability to non-controlling interest | - | 64 | (64 | ) | (100%) | 549 | 232 | 317 | 137% | |||||||||||||||
| Change in contingent liability | - | - | - | 100% | (760 | ) | - | (760 | ) | 100% | ||||||||||||||
| Share in profit of joint venture | - | 221 | (221 | ) | (100%) | - | 221 | (221 | ) | (100%) | ||||||||||||||
| Net loss from discontinuing operations | 849 | 7,213 | (6,364 | ) | (88%) | 3,190 | 41,346 | (38,156 | ) | (92%) | ||||||||||||||
| Adjusted EBITDA(1) for the period | $ | 566 | $ | (3,170 | ) | $ | 3,726 | (118%) | $ | (1,552 | ) | $ | (8,086 | ) | $ | 6,534 | (81%) | |||||||
(1) EBITDA, Adjusted EBITDA, Gross Profit, Gross Profit Margin, Cash flow, and Normalized cash outflow are non-GAAP measures.
Gross Profit
Gross Profit is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross Profit referenced herein is defined as revenues less cost of sales. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the operating performance of the business.
Gross Margin
Gross Margin is a non-GAAP financial ratio that has Gross Profit, which is a non-GAAP financial measure as a component. Gross Margin referenced herein is defined as gross profit as a percent of total revenue. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the operating performance of the business.
Cash outflow and Normalized cash outflow
Normalized cash outflow is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Cash outflow, utilized in the calculation of normalized cash outflow, is defined as the decrease in cash and cash equivalents for the applicable period. Normalized cash outflow, as referenced herein, is defined as cash outflow adjusted for expenditures that are not expected to be recurring, net of changes in non-cash working capital, discontinuing operations, payment of contingent consideration, and net proceeds from business divestitures. For the purpose of calculating Normalized cash flow, expenditures that are not expected to be recurring include cash-related adjustments to EBITDA. Management believes that normalized cash outflow, in addition to other conventional financial measures prepared in accordance with IFRS, provides information that is helpful to understand the financial condition of the Company. The objective of using normalized cash outflow is to present readers with a view of the Company from management's perspective by interpreting the material trends and activities that affect the Company's use of cash. These measures do not have a comparable IFRS measure and are used to ensure that we have sufficient liquidity to meet our liabilities as they become due.
Annual Recurring Revenue ("ARR")
ARR is defined as the average annualized contract value for closed sales. This measure does not have a comparable IFRS measure and is used by the Company to assess the impact of closed sales on future period revenue projections.
About CloudMD Software & Services
CloudMD is an innovative North American healthcare service provider focused on empowering healthier living by combining leading-edge technology with an exceptional national network of healthcare professionals. Every day, our employees and healthcare providers live our values of delivering excellence, collaboration, connected communication and accountability to solve complex health problems. CloudMD's industry-leading workplace health and wellbeing solution, Kii, supports members and their families with a personalized and connected healthcare experience across mental, physical, and occupational health. Kii delivers superior clinical health outcomes, consistent high engagement, and measurable ROI for payers such as employers, educational institutions, associations, governments, and insurers. CloudMD is also a market leader in workplace absence management through data-driven prevention, intervention, and return-to-work programs.
In addition, the Company sells health and productivity tools to hospitals, clinics, and other healthcare service providers to empower them to deliver better care. Visit www.cloudmd.ca to learn more about the Company's comprehensive healthcare offerings.
"Karen Adams"
Chief Executive Officer
FOR ADDITIONAL INFORMATION, CONTACT:
Investor Relations
1-647-484-1405
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward Looking Statements
This news release contains "forward-looking statements" and "forward-looking information" within the meaning of Canadian securities laws, including statements about the Company's expectations and strategies regarding growth and profitability. These statements are based upon information currently available to CloudMD's management. All information that is not clearly historical in nature may constitute forward‐looking statements. In some cases, forward‐looking statements may be identified by the use of terms such as "forecast," "assumption," and other similar expressions or future or conditional terms such as "anticipate," "believe," "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would," and "should". Forward-looking statements contained in this news release are based on certain factors and assumptions made by management of CloudMD based on their current expectations, estimates, projections, assumptions, and beliefs regarding their business, and CloudMD does not provide any assurance that actual results will meet management's expectations. While management considers these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. Such forward‐looking statements are not guarantees of future events or performance and by their nature involve known and unknown risks, uncertainties, and other factors, including those risks described in the Company's MD&A (which is filed under the Company's issuer profile on SEDAR+ and can be accessed at www.sedarplus.ca), that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. Although CloudMD has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward‐looking statements, other factors may cause actions, events, or results to be different than anticipated, estimated, or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such forward‐looking statements. Accordingly, readers should not place undue reliance on forward‐looking information. CloudMD does not undertake to update any forward-looking information, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.
(1) This is a non-GAAP measure. Refer to the Non-GAAP Financial Measures section of this news release for further information.
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